James Delahunty
12 Aug 2009 20:29
Redbox, a DVD rental Kiosk service that operates 17,900 kiosks in the U.S., has filed a lawsuit against 20th Century Fox for attempting to delay new releases from its machines. Fox, like Universal before it, believe that Redbox' $1 rental fee and $7 DVD sales seriously undervalue the product, and will do damage to DVD sales by diverting consumers away from stores like Blockbuster where they are surrounded by new DVDs to buy.
The lawsuit was filed on Tuesday in U.S. District Court in Wilmington, Delaware. Redbox had previously sued Universal for the same tactics and is awaiting a decision. The Fox lawsuit accuses the studio of violating antitrust laws by reducing consumer choice in the marketplace, as well as increasing prices that consumers must pay.
Not all studios feel the same way as Fox and Universal however. Sony Pictures reached a deal with Redbox to offer Sony titles for rental, as long as Redbox destroyed the rental DVDs instead of selling them when their rental life is over. Lions Gate Entertainment Group also agreed on Tuesday to make its films available to Redbox immediately.
Universal and Fox are attempting to delay new releases from reaching the kiosks, anticipating that DVD sales will be lost, by pressuring distributors to wait a number of weeks before selling to Redbox. However, Redbox customers won't have noticed a difference most likely, because the company paid a premium cost and bought new DVDs from retailers instead, hitting the company's profit margins but maintaining supply.